Entry Adjustment on USD/CHF

Good afternoon forex traders!  Last week’s pick up in volatility slightly changed the price picture for USD/CHF, but not my directional bias. Here’s an entry adjustment to make sure I don’t miss this opportunity.

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Original Trade Idea: Switching GBP/CHF for USD/CHF

USD/CHF 4 Hour Forex Chart

USD/CHF 4 Hour Forex Chart

Again, big volatility last week from several different catalysts, most notably the weaker-than-expected U.S. Jobs report for July.  The disappointment in net adds and a rise in the unemployment rate had forex traders giving back the Greenback’s gains on monetary policy tightening speculation by the Fed.  Personally, I think that adding over 200K net jobs still shows strength, at least enough to make the U.S. still one of the best houses on an ugly block.

Of course, after quite a run since its last major swing low around the end of June, a further pullback maybe be in the cards on profit taking, especially ahead of this week’s ECB monetary policy meeting.  There isn’t a direct effect here, but the Swiss Franc does move in strong correlation with the euro because of the strong trade relations in that region.

And since I’m not anticipating a big change to European monetary policy (but who knows with Draghi at the helm, right?), I think the pullback may be shallow, which is why I’m going with a scale in entry technique, similar to my recent NZD/CHF trade (still working and in profit).  I’ve canceled my full entry at .9000 to scale in at two different levels with smaller positions, but the same account risk.  Here’s what I’m doing now:

Long half position at .9050, stop at .8935, initial target at .9205

Long half position at .9000, stop at .8935, initial target at .9205

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t follow what I do. Risk Disclosure.

I’m still only risking 1.00% of my account on this one, and if fully entered with this trade structure, I have a potential reward-to-risk ratio of about 2:1.  Ultimately though, if the market environment and outlook supports a move higher, I may shoot for the next major resistance area around .9500.  Of course, anything can happen in the forex markets, so if the story changes I’ll be sure to reassess and adjust quickly if necessary. Stay tuned by following me on Twitter and Facebook!